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- Investing alone : While investing in the stock market
without the pressure of a broker pushing stocks which provide high
commissions can be liberating, it has its own pitfalls. The lack
of a safety net allows online traders to easily lose substantial
amounts of money, often because novice investors will pay more
attention to emotion and focus more on the short term benefits.
Long term investment requires discipline, one of the reasons why
traditional investing firms such as Merril Lynch, Paine Webber, or
Salomon Smith Barney spend considerable time and effort to research
the securities that they invest in.
- Security : Although there have been considerable
efforts to make the Internet a safe place to do business, computer or
network problems of any sort can have disastrous consequences on an
investor's portfolio. If the market is moving rapidly, and a
trade takes longer than expected to complete, a stock can quickly
change from being a profitable acquisition to a burdening loss.
Hackers, viruses and worms can also render a company's web site unable
to accept trades, isolating the customer and preventing him from
accessing his portfolio.
- Personalized services - Depending on the size of an
investor's portfolio, full service brokerages often provide red carpet
service including advice on matters such as taxes, real estate
investments, and the ability to execute trades easily over the phone -
directly with a broker. Overall however, reliability and peace
of mind associated with dealing with a regular brokerage firm can
often be an important consideration by a novice investor who is not
interested in doing the research and analysis necessary for regular
online trading.
The ACM code of the ethics, section 2.5 provides that its members
should "Access computing and communication resources only when
authorized to do so". For crackers and info-terrorists, stock
exchanges and their transactions are potentially lucrative targets. The
need to secure transactions, the exchanges and their software systems is
paramount in the financial world. It is important however to ensure that
during the development of these software systems, unauthorized backdoors
are not installed by unscrupulous developers. This can be checked by the
application of rigorous software engineering principles, and the
segmentation of development tasks.
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